$13-39.$ LO $5,8$ This case will enable you to practice conducting planning and substantive analytical procedures for accounts in the acquisition and payment cycle. When analyzing the financial data, you may assume that the $2015$ information is unaudited, while prior$-$year data are audited.

As you complete this case, consider the following features of and trends in the pharmaceutical industry and for PharmaCorp specifically:

After a long period of industry dominance by companies in the United States, the United Kingdom, and Europe, these companies are facing increasing competition from companies domiciled in emerging economies, such as Brazil, India, and China.

There exists significant uncertainty in the market because of recent regulation covering health care and government payouts for certain procedures and related pharmaceuticals.

Health care policy makers and the government are increasingly mandating what physicians can prescribe to patients.

Health care policy makers and the government are increasingly focusing on prevention regimes rather than treatment regimes,

thereby leading to shifts in the demand for various pharmaceuticals.

The global pharmaceutical market is anticipated to grow by $57\%$ in $2016$ compared with a $4-5\%$ growth rate in $2015,$ according to a leading industry analyst publication.

Beginning in $2014,$ PharmaCorp initiated and executed a significant company$-$wide cost reduction initiative aimed at improving manufacturing efficiency, cutting back on research and development expenses, and eliminating unnecessary corporate overhead.

PharmaCorp's policies for extending credit to customers have remained stable over the last three years. PharmaCorp's credit granting policies are considered stringent within the industry, and analysts have sometimes criticized the company for this, contending that such policies have hindered the company's revenue growth relative to industry peers.

Two of PharmaCorp's popular pharmaceuticals, Selebrax and Vyvox, came off patent during the fourth quarter of FYE $2015.$ These pharmaceuticals now face competition in the generic drug portion of the overall industry market.

Information specific to the PharmaCorp's debt activities:

Long$-$term debt balances $($in the millions$)$ for $2015($unaudited$)$ and $2014($audited$)$ were $$31,036$ and $$34,926,$ respectively.

file, then complete the requirements in $13-39.$

The primary financing activity related to debt was net repayments of just over $$1,500,000.$

Approximately $$2,500,000$ of long$-$term debt was reclassified as curreh in $2015.$

The average interest rate on the long$-$term debt $($based on the high and low rates of PharmaCorp's debt instruments$)$ was $5\mathrm{.}34\%.$

Interest expense in $2014($audited$)$ was approximately $$2,000,000.$

g$.$ Access the PharmaCorp Excel file at the text website. Refer to the worksheet labeled "PharmaCorp Long Term Debt." Use that information to develop a more precise estimate for interest expense for long$-$term debt. Given the estimate that you developed, what is your conclusion regarding the client's asserted amount of interest expense for long$-$term debt?

BcDEFGH$$MMaturity$20156\mathrm{.}20\%$M$$rch $20223,3275\mathrm{.}35\%$Mar$-183,0657\mathrm{.}20\%$Mar$-422,9004\mathrm{.}75\%$Jun$-192,6385\mathrm{.}75\%$Jun$-242,634$Dooentber $31,2015,$ the notehas boenrecilassified ofCurrent partion$2,4072,0861,832-1,3841,284$